Six things real estate salespersons must remember when handling HDB flat rentals

Six things_HDB flat rentals_780 x 491

Oct 2022 - 4 min read

From being familiar and complying with existing guidelines, to advising clients to confirm that they are eligible and seeking the Housing & Development Board’s (HDB) approval to rent out their flat, here are six important things that real estate salespersons (RESs) must be mindful of when representing HDB flat owners looking to rent out their flat. 

#1: Be familiar with and explain to flat owners the policies/guidelines on renting out their HDB flat

CEA would like to remind all RESs that the Code of Ethics and Professional Client Care (CEPCC) requires you to protect and promote the interests of your clients. RESs must therefore be fully conversant and comply with the relevant laws, regulations and codes that apply to property transactions, including HDB’s guidelines. You should also take time to explain these guidelines to your clients. 

The full set of guidelines for renting out flats can be found on the HDB InfoWEB

Here are some key ones:

  • Only Singapore Citizen households who have fulfilled the minimum occupation period (MOP) can rent out their whole flats. Households where all the flat owners are Singapore Permanent Residents (SPRs) are not allowed to do so. 

    The MOP ensures that flat owners purchase HDB flats with the intent of living in the flat themselves, instead of quickly reselling the flats for profit, or renting out for rental income. It deters speculative purchase of HDB flats and helps to keep these flats affordable for those with genuine housing needs. 

  • Flat owners should also take note of the maximum number of tenants allowed in each flat:
    • 1-room and 2-room flats: 4 tenants
    • 3-room and bigger flat types: 6 tenants
  • Flat owners must consider the non-citizen (NC) quota if any of their tenants renting the flat are of a foreign nationality holding a valid work/immigrant pass.  

    The NC quota is to prevent the formation of foreigner enclaves in HDB estates and maintain the Singaporean character of our HDB heartlands while balancing the housing needs of citizens and foreigners in Singapore. Malaysians are not subject to this quota in view of their close cultural and historical similarities with Singaporeans. If the quota is reached, only Singaporeans and Malaysians can rent a flat in that neighbourhood/block. 

    Flat owners may use HDB’s e-Service to check the NC quota for the flat. Do note that the NC quota enquiry results are only applicable for renting out applications submitted within the same month. 

#2: Advise flat owners to check their eligibility to rent out their HDB flat

To check their eligibility to rent out the whole flat, flat owners may login to My HDBPage with their SingPass, and go to “My Flat > Purchased Flat > Renting Out of Flat”. 

Do guide your client to perform this important step before facilitating the transaction. As part of your due diligence checks, you should also request for a screenshot of the notification from HDB to your client for your retention.  

#3: Do not facilitate the rental transaction if the criteria (e.g. meeting the MOP requirement) to rent out whole flat has not been met 

There have been cases of RESs breaching HDB’s regulations when they facilitated the renting out of whole HDB flats, often under the guise of room rentals – in spite of being aware that the flat owners had yet to fulfil the MOP, or are SPRs and ineligible to rent out the whole flat. Errant RESs may be warned, issued a financial penalty and/or have their registration with CEA suspended or revoked.

Under the CEPCC, RESs must not do anything which may directly or indirectly lead your clients to infringe any property-related laws and regulations, including HDB’s guidelines. In the context of renting out of HDB flats, this means that your clients must meet HDB's eligibility requirements to rent out their flats, including fulfilling the MOP. 

As professionals, RESs should not work with clients to circumvent existing rules. If you encounter clients who ask you to facilitate the rental of a whole flat when they are ineligible e.g. if they have yet to fulfil the MOP requirement, do reject such requests and advise your clients on the right thing to do. This would not only protect your own interests, but also that of your client and the prospective tenants. It will also signal to consumers that RESs conduct their work with integrity and hold high ethical standards. This will in turn contribute to further uplifting the standing and reputation of the RES profession.  

In June 2022, CEA took disciplinary action against RES Ivy Kim Peisi, who had represented the landlord in the rental of the whole HDB flat which was still within MOP. 

Despite knowing that the flat was still within the MOP and that the landlord had not obtained approval from HDB to lease out the whole flat, Ivy proceeded to advertise to rent out the whole flat and facilitate the transaction. When the tenant and his wife attended the viewing, Ivy showed them around the flat, including the living hall, kitchen all three bedrooms. She also informed them that they could use the entire flat if they rent it. After the landlord agreed to rent the flat to the tenants, Ivy prepared a room rental agreement for two rooms, instead of a whole flat agreement. The agreement also stated that the flat should not be occupied by more than two persons. When the tenant’s wife expressed concerns about the agreement, Ivy assured the tenant’s wife that her entire family could use the whole flat, including all the rooms, and that the tenant could ignore the wording of the agreement as it was just a formality.  

When HDB found out about the unauthorised flat rental after an inspection, Ivy assisted the landlord to help cover up the matter. Text messages between Ivy and the landlord showed that she had encouraged her client to rent out the flat in a manner that she thought would allow him to circumvent the legal requirements. The flat was subsequently compulsorily acquired by HDB on the grounds that the landlord had rented out the whole unit without HDB’s prior written consent.  

Ivy’s actions had caused inconvenience and expense to the tenants, who had to move out only after moving into the flat for about just a month and a half. Further, had Ivy been more principled in her dealings with the landlord and not assisted him in renting out the entire flat, the landlord’s flat might not have been compulsorily acquired by HDB.  

CEA’s Disciplinary Committee imposed a $5,000 financial penalty and a 4-month suspension on Ivy. She was also required to pay fixed costs of $2,000 in favour of CEA.  

#4: Advise flat owners to check that their foreign tenants (Malaysian citizens excluded) are legally residing in Singapore 

You should advise your client to check that their non-citizen tenants hold valid work/immigrant passes with a validity of at least six months at the point of the renting out application to HDB. These checks can be done online:

#5: Ensure that flat owners obtain HDB's approval to rent out their flat

Do remind your clients that they must obtain HDB's approval before they rent out their flat. They can submit their application through one of these channels:

#6: Explain the clauses in the tenancy agreement to flat owners

The Tenancy Agreement covers the terms and conditions of the renting of a property, containing clauses relating to the main aspects of the tenancy to protect and balance the interests of both landlords and tenants. Do ensure that your client understands them before signing the agreement. 

You can find templates for the renting out of HDB flats and private residential properties, and for landlords and tenants, on CEA’s website. The templates were drafted by the Digitalised Property Transactions Workgroup (DPTWG) – a workgroup comprising industry representatives from across the real estate value chain and all key government agencies with touchpoints in the property transaction process. The DPTWG gathered input from other regulatory agencies and industry practitioners who are experienced in the residential property transaction process, to ensure that the templates provide a common standard that is fair to all parties in the transaction.  

We remind all RESs to act professionally and ethically by putting the above pointers into practice when facilitating a HDB flat rental transaction. 

Information accurate as at 21 Oct 2022

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